Of course, having a bit of a national conversation with ourselves isn’t a bad thing. It’s healthy to ask questions. And there can be some spinoffs. A bit of navel gazing by Australians lead to Dr Karl Kruszelnicki‘s mini-thesis and why belly button fluff is always blue (true blue that is, or is it green, Karl?).

But as healthy as questioning is, it is important to know to have a good amount of evidence on side to really get a handle on things. In these days of 24 hour news cycles, and instant opinion making, having a loud megaphone and the capacity to put the boot into someone or some group seems to carry more weight than a considered opinion based on research or a fair minded assessment of a complex issue affecting the nation. Whether it’s a shock jock at home or a celebrated expat touching down on an airport tarmac to launch a diatribe on the national character, some of the louder voices of public opinion drown out the voices of other Australian citizens.

But as we approach January 26th, we should clear the air by disposing a few great Aussie myths, which will fill the air waves this week. By doing that, we’ll have a better informed dialogue about the future of the nation. If New Zealanders are once were warriors, Australians are once were worriers. As a result of our mass worrying several myths are created as fact, and distort the debate. So if we can dispose the myth, then we will literally have no worries. Let’s take few myths that you always hear around this time of year.

Myth one is one we always hear that ‘immigrants take our jobs.’ This has come to the fore recently in the form of Liberal MP Theresa Gamboro’s ‘scientific’ observation that immigrants don’t know how to queue of use deodorant. Putting the great Rexona question aside, in the labour market the evidence shows that immigrants make a positive contribution to the labour market. Immigrants make good exporters. According to Sensis research, 50 percent of all exporters are born overseas. They bring skills, networks, language culture and a bit of entrepreneurial flair and enrich us as an economy and a society. Think Westfield, TNT, Myer, Bing Lee, Crazy Johns all started by migrants. Think of the Australian business hall of fame. Names like Lowy Abeles Parbo come to mind. Immigrants make good employers and good workers. Exporting businesses (many started by immigrants) pay 60 percent higher wages than other companies, and provide job security and higher occupational health and safety (O H & S) standards. As employees, immigrants are often highly skilled and work ready. According to the Australian Bureau of Statistics (ABS) shows that while immigrants account for less than 30 percent of the labour force, they have claimed more than half the jobs created since the start of 2010. Immigrants are both employable and self-employable.

Myth two is that ‘we’re experiencing a brain drain’. Apparently all our best and brightest are leaving and this is harming our economy. Well. It is true that there are 1 million Aussies overseas, according to the seminal work on this subject by the Lowy Institute, but it is more ‘brain gain’ than ‘brain drain’. Many Australians work and study abroad – especially in their younger years – get experience and like a boomerang, they come back, especially when wanting to raise a family. But it’s not a bad thing for Australians to have overseas experience, and if some stay on and become Vice Chancellor of Oxford University, editor of The Times, or hold down key positions in Shanghai, Seattle or Sao Paulo, that just opens up strong networks for the rest of us. Also with the global financial jitters affecting northern hemisphere financial markets, more expat Aussies will be coming home than we thought.

Myth three is ‘Australian workers are bludgers’. When Jeff Kennett was Premier of Victoria and attacking public holidays, annual leave and penalty rates, labour market research showed that Australia was mid-table in terms of public holidays and most countries paid annual leave loading, annual leave and leave bonuses. On international comparisons, Australians are relatively hard working; they focus more on practical productive outcomes (than clocking up hours at the office or other workplace) and have a moderate amount of public holidays. We’ll be taking Australia Day off, but Chinese New Year holidays and celebrations last two weeks and other countries have similar festivals. According to international brand surveys, Australians are perceived to ‘work hard and play hard’ and their easy going nature should not be confused with sloth or laziness.

Myth four is ‘We’re just China’s quarry and Japan’s beach.’ This pops up from time to time along with the comments that we are not clever, innovative or ‘high tech’ enough. Australia’s chief scientist (along with the head of Hewlett Packard) said 10 years ago that Australia needed to forget commodities (he said this just before our record terms of trade boom) and build a strong technology sector like Taiwan of the Australian dollar ‘would be 30 cents US by 2010’. The comment ignores the fact that innovation comes from many industries including Australia’s traditional areas of comparative advantage in mining and agriculture. Everywhere I go in the world, I meet small Perth companies that sell technology to the Siberian or Brazilian mining sectors, McLaren Vale winemakers selling marketing software and services to Argentina and France, and everyone knows about the innovation in Australian surf wear, surfboard and sports innovation. Check out how many Billabong boardies you next see in Bordeaux, Bali or on the surf coast of Brazil, Peru, Chile or South Africa. Innovation comes from many places, not just the computer industry.

And finally, there is a myth that ‘We are too far away to matter.’ Well that may have been so in 1788 when we were a convict colony waiting for ships to come from England. The brilliant and eminent Australian historian wrote eloquently about this in his famous treatise The Tyranny of Distance. Now in the 21st century, Australia finds itself at the right place at the right time in the Asian time zone, and supplying what China, India, ASEAN and the rest of the emerging world need. With euro-gloom and American blues economically, the rise of Asia may well see Australians talking less about ‘the Tyranny of Distance’ and more about ‘the Power of Proximity’ in years to come.

Happy Australia Day!

Tim Harcourt is the JW Nevile Fellow in Economics, Australian School of Business, UNSW and author of The Airport Economist: www.timharcourt.com

For those of you who don’t believe it, (“Ho Ho Ho” we hear you say), look more closely at the Santa Claus (Proprietary Limited) operation. You will find that Santa’s business operation; structure and delivery system have strong support in the academic literature on what makes a thriving export business tick.

First of all, Santa Claus is a born global. Santa realised a long time ago that the North Pole has a limited domestic market for toys. He therefore decided to run his business on an international basis. This is an important lesson for many companies in a small country like Australia. If you have a limited domestic market, you should think about exporting. UNSW research recently highlighted many companies that are ‘born global’. Take Lochard, an airport noise and flight monitoring company based in Melbourne. Lochard knew that its growth in Australia was limited to the small number of airports so it immediately looked overseas to sell its monitoring equipment. As a result it now sells the UK, the USA, Asia, the Middle East and South America. Many Australian companies are born global – particularly in knowledge-based industries. Around a quarter of new exporters are born globals.

Secondly, like most successful global businesses, Santa Claus is a well-known brand and he has built a sustainable export business around the brand while keeping his corporate headquarters in the North Pole. In this way, he maintains a worldwide brand whilst maintaining the company’s roots and strong local identity (which is part of his brand’s strength and reputation). This is a good lesson for potential exporters. As UNSW research shows, global brands can be built from small local economies – especially in rural and regional Australia.

Thirdly, Santa Claus has maintained a high standard of human resource management. He has a stable, loyal workforce and good industrial relations. In fact, there’s never been a strike or lockout at the North Pole as Workchoices never made it that far north! Santa’s Little Helpers have been with the company all their careers and have hence built up strong networks and knowledge about the company and its operations. The academic knowledge management literature shows that long-serving employees are the best knowledge workers as their experience and social networks make them far more effective to the company than younger workers. Furthermore, good wages and conditions help too. Austrade & UNSW research shows that exporting companies, on average pay higher wages and provide better conditions and job security than do non-exporters. This helps the company too in terms of skill development and productivity.

Fourthly, Santa overcomes logistical problems by using intermediaries. He cannot gain all the market knowledge he needs so he uses proxies (such as parents, grandparents, aunties and uncles) to ascertain the ultimate needs of consumers. He then franchises to reliable local parties to ensure that he goes the “last quarter mile” in satisfying the customer (and therefore avoids the pitfalls that have beset many dot.com companies).

Fifthly, Santa, like all successful exporters, visits the market on a regular basis and undertakes market research in the lead up to Christmas. He seeks advice about the market (where required) through strategic positioning at shopping centres and by making selective appearances at Christmas parties. This has enabled him to adapt his product to different cultures in countries all over the world. On the big night itself, he uses simple market entry strategies – via the chimney – and responds well to clear market signals (such as Christmas stockings hung over mantle pieces).

Finally, like all successful exporters, Santa Claus is flexible and innovative. Like all good exporters, he leads the market in terms of consumer tastes and trends. For instance, Santa knew when wooden toys were making way for plastics and electrical goods. He’s always up with all the latest technology. Furthermore, UNSW research shows that exporters are very innovative in terms of production methods and business practices. Santa is no exception. When faced with an unusual natural resource (a red nosed reindeer named Rudolph) Santa demonstrated his ability to think outside the box and had Rudolph lead the other reindeers in pulling the sleigh in bad weather.

So there you have it, Santa is a long-term, sustainable exporter operating a global business in many different markets. He knows his customer (through direct and indirect mechanisms), knows the importance of his brand and treats his workers and his reindeers well. So enjoy the Christmas break and let’s hope Santa delivers for you too.

Tim Harcourt is the JW Nevile Fellow in Economics at the Australian School of Business, UNSW and the author of The Airport Economist: www.theairporteconomist.com

The first of the baby boomers will be retiring this year. In fact when Bob Hawke and Paul Keating floated the dollar, many baby boomers were in their thirties and forties and taking their businesses out of Fortress Australia and onto the world stage. The lucky country indeed made its own luck as our leaders opened up our economy to Asia and the emerging world, and many of our businesses were brave enough to chance it in new lands that were not nearly as affluent or easy to do business in as they are today.

Yes, the lucky country was lucky to have those brave baby boomers but we were also lucky in another sense. Much of Australia’s success as an exporting nation was due also to the efforts of the post-war immigrants who ended up leading successful companies. Think about some great Australian icons: Westfield, Bing Lee, Aussie, Crazy John’s, Myer… they were all started by someone born outside Australia or a first generation Australian. Around 50 percent of all exporters and two thirds of all entrepreneurs were born overseas, so immigration has helped build our export capability.

Who Takes the Baton?

So who are the next generation of exporters that will lead Australia for our next stage of prosperity? When the post-war generation moves on to that business lounge in the sky and when the baby boomers retire to their lucrative superannuation and part-time directorships, will Generation X fill their shoes to become ‘generation export’ and will Gen Y become the ‘global generation’?

Austrade and Sensis data can give us some guidance. Of all small and medium sized enterprises (SMEs) who are exporters, 42 percent of businesses have been in the game for over 20 years. This compares to 6 percent who have been around for less than five years, and 25 percent who have been around for less than 10. Why is this so? Because you need a bit of experience to compete in global markets (to get used to swings in commodity prices, exchange rates and so forth) and also to build strong relationships with your overseas business partners so you can survive dramatic events like the Asian financial crisis or the recent GFC (which Australia got out of unscathed, thanks to our past reforms and the resilience of our experienced exporters).

But there’s another implication to gaining export experience. This also means that the average age of the proprietor of an exporting SME tends to be older than that of your local domestic businesses. According to the research, 39 percent of all exporting SMEs are classic baby boomers aged in their 50s, and a further 27 percent are over 60. By contrast Generation Xers made up smaller numbers, with 20 percent of all SME exporters in their forties and 13 percent thirtysomethings. GenYs are 1 percent and Gen Zs are still watching The Wiggles.

Should we be worried? Not necessarily, as it is just a matter of Gen Xers getting the experience to run exporting companies. This will occur through generational change as the baby boomers pass on the baton. In addition, there are many reasons why Gen X and Y and Z will be okay to lead the charge.

Naturally, many market economists have also speculated as to how the high exchange rate would affect exporters. The general school of thought says that an appreciation of the exchange rate – that is the Australian dollar is more expensive in terms of US dollars – makes Australian exports more expensive and imports cheaper.

Goods and services exports that are particularly price elastic, where consumers are sensitive to prices changes, may see demand fall sharply, while price elastic imports will see a big pick up in demand. This is assuming, of course, that lower prices are passed on.

Business groups are also worried, particularly in areas like agriculture and manufacturing where higher commodity prices are not on offer like their resources counterparts. While non-rural commodity prices have been holding up better than expected – thanks to the China’s insatiable appetite for coal, iron ore and liquefied natural gas – other sectors of the economy have not been so fortunate.

However, when you look at the dollar’s behaviour and its effect on exporters more closely, there is a little bit more to it than first meets the eye.

The dollar isn’t everything

Firstly, the exchange rate is just one factor affecting the decision to export. Most of the economic evidence shows that since the Aussie dollar was floated over two decades ago, exporters have become used to fluctuations in exchange rates as part and parcel of doing business offshore.

Why is this so? Basically, since the Australian economy became more internationalised, the majority of our exporters don’t let fluctuations in exchange rates ruin their business plans. They see a moving exchange rate as a fact of life of operating in the global economy and make their decisions based on long-term plans and building strong relationships with clients, customers and business partners.

One lesson of the Asian financial crisis that occurred a decade ago was that Australian firms that stuck in the region ‘through thick and through thin’ were well regarded in Asia when the economies bounced back. Nobody likes a carpet-bagger who takes off when the going gets rough only to magically re-appear when times are good again. We’re seeing similar things occurring in the global financial crisis too.

In fact, according to research by Austrade and DHL, while most exporters regularly monitor the exchange rate, only 20 percent believe that it will affect their decision to further invest or expand their overseas operations.

Many exporters also undertake hedging in their contacts to mitigate against future changes in the exchange rate. According to the survey data, 24 percent of large and 25 percent of medium-sized exporters engage in some form of hedging compared to only five percent of small exporters and four percent of microbusinesses.

Secondly, other economic factors are important. Of course, strong commodity prices matter, as does overall growth in the world economy. Long-term growth in export volumes are mainly determined by global economic demand, so return to growth in the world economy – particularly in the Asia-Pacific – will be a more important factor affecting exporters than a 90-cent-plus exchange rate. If the emerging economies can lead the recovery from the GFC then this will be crucial for our exporters.

Thirdly, most media commentary says that exporters will be losers from a high dollar and importers will be winners. But they are not two distinct groups. Around 45 percent of Australian exporters are also importers, so a high dollar may mean a more expensive product on the price side, but it may also be cheaper on the cost side when an exporter imports components or stock. It’s a matter of swings and roundabouts.

Don’t get me wrong, exporting is a tough game. But it is also commercially rewarding as exporters, on average, earn high profits, are more productive and grow faster than non-exporters. They can therefore absorb external shocks in exchange rates and commodity prices as they are in it for the long haul.

Australia is one of the few economies in the world to achieve export volume growth despite an 11 percent fall in world trade in 2009. That Australian exporters have achieved this, despite the GFC and the associated ‘recession porn’ we read in the press, is a remarkable achievement and helps explain why the Australian economy has gone from ‘Down Under’ to ‘Down Wonder’ in the eyes of many international investors.

—Tim Harcourt is chief economist of Austrade and author of The Airport Economist. See his column at www.austrade.gov.au/economistscorner